Commodities Daily. Highest US corn stocks in 29 years. Commodity Research. For important disclosure information please see page 6.

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1 Commodity Research Commodities Daily Highest US corn stocks in 29 years Energy: Brent oil is trading below $57 per barrel today, partly due to the contract rollover. The December contract, which is the benchmark from today, was previously trading well below the November contract, which expired on Friday. The oil price is coming under pressure on several fronts though, such as the stronger US dollar, higher OPEC production and the outlook of a further production rise in the US. According to Reuters, OPEC production rose by 5, barrels per day in September. Compliance with the production cut was 86%, which is relatively high, but this shouldn t close our eyes to the fact that Saudi Arabia and Angola cut more than agreed, while countries such as the United Arab Emirates, Ecuador and Iraq are only complying at a rate of about 3%. Weak production discipline within OPEC and the cut exemptions for Libya and Nigeria should mean in our view that closely observed OECD stocks will not fall quite as quickly as expected. At the same time, production outside OPEC and particularly in the US should continue to increase. On account of stronger drilling activity the number of active drilling rigs in the US rose by six last week according to Baker Hughes US oil production should rise. We anticipate that it could reach its highest level since 197 this autumn, at over 9.6 million barrels per day. The latest price rise was strongly driven by speculation, whereby the number of net long positions of money managers in WTI rose by 52, contracts, or 25%, in the week ending 26 September. Oil prices are therefore currently vulnerable to further profit taking and price corrections. Precious metals: Gold has dropped to a 6½-week low of a good $1,27 per troy ounce at the start of the new trading week. Factors weighing on the price are the firmer US dollar, rising equity markets and higher bond yields. Silver is being pulled down along with gold; it has slid to just under $16.6 per troy ounce, its lowest level in 7½ weeks. A certain indifference appears to have spread among market participants; yesterday s independence referendum in Catalonia is being ignored for example. Just under 9% of voters were in favour of the region seceding from Spain, although less than half of the people entitled to vote actually did so. The Spanish police has massively intervened in the referendum and the situation could escalate further as the Catalan government is apparently sticking to its plans to declare Catalonia s independence. The conflict with North Korea is also being disregarded. US president Donald Trump yesterday described the talks between his foreign minister Rex Tillerson and North Korea as a waste of time and indirectly threatened war again. Should market participants end their indifference, gold should be in demand again as a safe haven and crisis currency. Gold has also felt headwind from speculative financial investors recently as they have strongly withdrawn from the market for the second week in a row lately according to the CFTC statistics net long positions dropped to a 5-week low and thus contributed to the gold s price fall. 2 October 217 Speculative market positioning (net) 26-Sep contracts Weekly change WTI Henry Hub Gasoline Gold Silver Platinum Palladium Copper Wheat Corn Soybeans Cotton Coffee Cocoa Sugar Source: CFTC, Bloomberg Number of active US oil and gas rigs 29-Sep USA total 94 5 Oil 75 6 Gas Horizontal Vertical 64-4 Directional 82 5 Source: Baker Hughes, Bloomberg Rig count weekly change CHART OF THE DAY: Many countries comply only insufficiently with production cuts 18% 16% 14% 12% 1% 8% 6% 4% 2% % Compliance with agreed production cuts in September Head of Commodity Research Eugen Weinberg eugen.weinberg@commerzbank.com Carsten Fritsch carsten.fritsch@commerzbank.com Barbara Lambrecht barbara.lambrecht@commerzbank.com Source: Reuters, Commerzbank Research For important disclosure information please see page 6. research.commerzbank.com / Bloomberg: CBKR Michaela Kuhl michaela.kuhl@commerzbank.com Daniel Briesemann daniel.briesemann@commerzbank.com

2 Base metals: Metals prices all look stronger as the new trading week gets underway. Copper is trading at a good $6,5 per ton, aluminium costs a little over $2,1 per ton and nickel is trading at around $1,5 per ton. Metals prices are being supported by the official Purchasing Managers Index (PMI) for manufacturing in China, published at the weekend, which rose significantly in September, against the expectation. This actually reached its highest level since April 212, at On the other hand, the PMI published by Caixin took a tumble, which shows the considerable imbalance in China s economy. The official PMI is a gauge of the state-owned enterprises, while the Caixin PMI concentrates on private companies. The latter are clearly having difficulties and to help these, the Chinese central bank has lowered the reserve requirement ratio for banks that lend money to small companies. Chinese markets are closed all week on account of the Golden Week, so there will be no impetus from there. In Chile, copper production is meanwhile recovering well from the outages in February and March because of the strike. According to data of the National Statistics Institute, 58,6 tons of copper was produced in August, which is 1.2% more than last August. Over 5, tons of copper was produced in one month for the first time this year. However, it will not be possible to fully recoup the losses that have accumulated since the beginning of the year. Agriculturals: The wheat price on the CBOT closed trading on Friday at a loss of 1.5%, hence following the spring wheat price on the Minneapolis Grain Exchange MGEX, which retreated by 3% after publication of new crop estimates by the US Department of Agriculture. The USDA surprisingly revised its estimate for the US spring wheat crop upwards by 14 million to 416 million bushels. Amid the drought in the spring wheat growing regions in the early summer and reports of an abandonment of acreage, a downward revision to 382 million bushels had been expected. The effects on the crop were apparently not so serious after all. The US winter wheat crop was a little smaller than previously assumed. And given the higher spring wheat crop, the estimate for the total wheat crop in the US was somewhat higher. The USDA now expects billion bushels (compared to billion bushels previously). On Friday, the USDA also published US grain stock levels as of 1 September. In the case of corn and soybeans, these are equivalent to the closing stocks for 216/17 and beginning stocks for 217/18 respectively. Corn stocks were thus billion bushels, which was less than expected but much more than in the previous year and the highest September level for 29 years. In the case of soybeans, stocks were likewise lower than expected, at 31 million bushels at the turn of the crop year, but still at a 1-year high. Prices Energy 1) current 1 day 1 week 1 month 217 Brent Blend % -4.4% 7.% -1% WTI % -1.5% 8.8% -4% Gasoline % -2.2% -.4% 4% Gasoil % -3.% 3.8% 5% Diesel % 1.3% 13.2% 9% Jet fuel % 1.2% 1.4% 3% Natural gas ($/mmbtu) % 3.1% -2.% -19% EUA ( /ton) % -3.7% 2.2% 7% Base metals 2) Aluminum % -3.% -2.4% 23% Copper %.7% -5.% 17% Lead %.9% 4.2% 24% Nickel 15.6% -1.5% -13.4% 4% Tin %.2%.5% -2% Zinc % 2.% -.8% 23% Precious metals 3) Gold % -2.9% -4.% 1% Gold ( /oz) % -2.% -3.3% -1% Silver % -3.6% -6.5% 4% Platinum % -3.3% -9.6% 1% Palladium % 2.2% -4.9% 37% Agriculturals 1) Wheat (LIFFE, /t) %.8% 5.4% -1% Wheat CBOT % -1.8% 1.5% 11% Corn %.9%.1% 6% Soybeans %.4% 1.9% 1% Cotton %.% -4.6% -3% Sugar % -1.5% 2.8% -28% Coffee Arabica % -4.8% -.5% -7% Cocoa (ICE NY) % 3.% 4.3% -4% Currencies 3) EUR/USD % -.9% -1.3% 12% Inventories Energy * current 1 day 1 week 1 month 1 year Crude oil % 1.7% -1% Gasoline % -5.5% -3% Distillates % -7.% -16% Ethanol % -3.6% 4% Crude oil Cushing % 7.8% -3% Natural gas % 1.9% -2% Gasoil (ARA) % -5.% -18% Gasoline (ARA) % -4.4% 16% Base metals ** Aluminum LME % -2.5% -4.9% -41% Shanghai % 14.9% 572% Copper LME % -3.2% 32.2% -21% COMEX % 1.% 7.6% 177% Shanghai % -45.% -4% Lead LME % -2.1% 6.1% -17% Nickel LME % 1.% -1.1% 6% Tin LME 27.%.% 8.4% -4% Zinc LME % -3.3% 3.8% -42% Shanghai % -8.4% -59% Precious metals *** Gold %.5% 2.6% % Silver %.2% -1.7% -3% Platinum %.% -2.7% 6% Palladium %.2%.5% -23% Source: DOE, PJK, LME, COMEX, SHFE, Bloomberg, Commerzbank Research Percentage change on previous period 1) 1 month forward, 2) 3 months forward, 3) spot Crude oil in USD per barrel, oil products, base metals and cocoa in USD per ton, Precious metals in USD per troy ounce, grains and soybeans in US cents per bushel, Cotton, sugar and coffee Arabica in US cents per pound * US inventories of crude oil, oil products and ethanol in barrel, US natural gas inventories in billion cubic feet, ARA stocks in tons ** tons, *** ETF holdings in ounces 2 2 October 217

3 Net long positions of money managers vs. price GRAPH1: Crude oil (WTI) GRAPH 2: Natural gas (Henry Hub; futures and swaps) 5 ' contracts spec. net long positions, ls WTI ($/barrel), rs GRAPH 3: Crude oil (Brent) ' contracts spec. net long posit., ls HenryHub ($/MMBtu), rs GRAPH 4: Gold 6 ' contracts Spec. Net long positions, ls Brent, $/barrel, rs Source: ICE; Bloomberg, Commerzbank Research GRAPH 5: Silver 1 22 ' contracts spec. net long posit., ls Silver (USD per troy ounce), rs GRAPH 7: Corn 3 ' contracts spec. net long posit., ls Corn (USd per bushel), rs ' contracts -5 spec. net long posit., ls GRAPH 6: Copper Gold ($ per troy ounce), rs ' contracts spec. net long positions, ls GRAPH 8: Wheat ' contracts Copper (USD per ton), rs -2 spec. net long posit., ls Wheat (USd per bushel), rs 2 October 217 3

4 GRAPH 9: Forward curve oil market (WTI) 54 GRAPH 1: Forward curve oil market (Brent) M 7M 13M 19M 25M 31M 37M 43M Source: NYMEX; Bloomberg, Commerzbank Research GRAPH 11: Forward curve gas market (Henry Hub) M 7M 13M 19M 25M 31M 37M 43M Source: ICE; Bloomberg, Commerzbank Research GRAPH 12: Forward curve gasoil (ICE) M 3M 5M 7M 9M 11M 13M 15M Source: NYMEX; Bloomberg, Commerzbank Research GRAPH 13: Forward curve aluminium (LME) GRAPH 15: Forward curve Nickel (LME) Source: ICE; Bloomberg, Commerzbank Research GRAPH 14: Forward curve copper (LME) GRAPH 16: Forward curve zinc (LME) M 5M 9M 13M 17M 21M 4 2 October 217

5 GRAPH 17: Forward curve lead (LME) 255 GRAPH 18: Forward curve tin (LME) M 8M 15M 22M 195 1M 4M 7M 1M 13M GRAPH 19: Forward curve wheat (CBOT) Source: LME, Bloomberg, Commerzbank Research GRAPH 2: Forward curve wheat (MATIF) M 8M 12M 18M 22M 16 3M 6M 8M 12M 15M 18M 2M 24M Source: CBOT; Bloomberg, Commerzbank Research GRAPH 17: Forward curve corn (CBOT) 42 Source: MATIF; Bloomberg, Commerzbank Research GRAPH 22: Forward curve soybeans (CBOT) M 8M 12M 18M 22M 94 2M 8M 12M 18M 23M Source: CBOT; Bloomberg, Commerzbank Research GRAPH 23: Forward curve cotton (NYBOT) Source: CBOT; Bloomberg, Commerzbank Research GRAPH 24: Forward curve sugar (NYBOT) M 6M 1M 15M 2M 25M M 9M 18M 22M 3M 34M Source: NYBOT; Bloomberg, Commerzbank Research Source: NYBOT; Bloomberg, Commerzbank Research 2 October 217 5

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